Global Partnership and Economic Integration between 

th EU d Jthe EU and Japan

September, 2011

Mi hi k N k iMichitaka Nakatomi

Principal Trade Negotiatorp gMinistry of Economy, Trade and Industry

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Views shown in this paper include personal ones

Michitaka NAKATOMI, Principal Trade Negotiator, METI

2011  Principal Trade Negotiator of METI

2008  President, Japan External Trade Organization (JETRO)

2006  Director‐General for International Trade Policy, METI    [2006‐2008 Negotiator for Anti‐Counterfeiting Trade Agreement (ACTA)]

2004 Deputy Director‐General, Economic Affairs Bureau, MOFA2004  Deputy Director General, Economic Affairs Bureau, MOFA[2005 Chaired a Japan‐EU Regulatory Reform Dialogue] 

2003  Deputy Director‐General, International Trade Policy Bureau, METI 

2002 Di f M f i I d i P li2002  Director for Manufacturing Industries Policy, Manufacturing Industries Bureau, METI 

[2002‐2008 Negotiator for 5 Japanese FTAs(Mexico Philippines Brunei Indonesia Switzerland)](Mexico, Philippines, Brunei, Indonesia, Switzerland)]

2000  Co‐chairman, APEC WTO Capacity Building Group

1995  Director, Tariff Division, International Economic Affairs Department, 

International Trade Policy Bureau, MITI        [1995‐1997 Negotiator for Information Technologies Agreement (ITA)]  

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20th EU‐Japan Summit, Joint Press Statement, 28 May 2011

“United by a shared commitment to fundamental values and principles, includingdemocracy, the rule of law and human rights, as well as to the market‐basedeconomy and sustainable development, and faced with common globalchallenges, Summit leaders are resolved to deepen bilateral relations from acomprehensive and long‐term perspective”.

Gl b l

comprehensive and long term perspective .

Global Partnership

SharedShared ValueValue Common ChallengesCommon Challenges

‐ Democracy‐ Rule of law‐ Human rights

‐ Growth deceleration‐ Rise of emerging countries‐ Strains on financial markets

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‐Market based economy‐ Sustainable development

‐ Fiscal constrains‐ Global warming 

Transition of trade share of the EU and Japan 

Saudi Arabia3% Others

19%

(2010)(1990)

Asia30%Australia

Saudi Arabia3% Others

17%

Asia51%

USA13%

EU‐2711%

Australia4%

19%30%

USA27%

EU‐2719%

Australia4%

13%

USA14%

hOthers

(2010)

USA20%

Japan9%

(1990)

China14%

Russia8%

Others41%

20% 9%

Russia

Others45%

Switzerland7%

JapanNorway4%

Turkey4%

India2%

Korea2%

Switzerland7%

7%

NorwayChinaturkeyindiakorea2%

4

Japan4%

4%4%2%4%2%

y2%2%

2%

Source: IMF, Global Trade Atlas

Japan as a major investor to EU

Japan’s FDI to the EU : 182 billion dollar (outstanding amount as of 2010)

*A di t th EUROSTAT J i th 3rd i t f ll i USA (1st) d S it l d (2nd) i 2009*According to the EUROSTAT, Japan is the 3rd investor following USA (1st) and Switzerland (2nd) in 2009.

Japanese overseas affiliates in the EU

Number of employees: 400 thousand

Sales: 251 bn EUR 

Source: JETRO

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Japan’s direct investment shifts toward the Asia‐Pacific

Japan’s Outward FDI StockJapan’s Outward FDI Stockpp

600 000

700,000

212 772 205 246

(100 million yen)

Total: 534,760

Total: 618,584Total: 617,400 Total: 682,097 Total: 676,911

400,000

500,000

600,000

150,434 144,060161,822 173,379176,399

186,004

197,054 204,584

212,772 205,246

USA

Asia

Total: 456,054

100,000

200,000

300,000

108,247(23.7%)

141,338(26.4%)

164,341(26.6%)

146,058(23.7%)

161,117(23.6%)

148,506(22%)

103,602

128,021 EU

Others

0

2005 2006 2007 2008 2009 2010

Source: Bank of Japan

Rank Country 2009 2010

Japan’s Outward FDI Flow top 3 (2009, 2010)(million dollar)

1 USA 10,660 9,193

2 China 6,899 7,252

ASEAN

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3 Australia 7,136 6,371

‐ EU 17,039 8,359 Source: JETRO

Policy Speech by Prime Minister Yoshihiko Noda to the 178th Session of the Diet (13th SEP. 2011)

“Based on the "Basic Policy on Comprehensive Economic Partnerships" we will make strategic moves seeking to conclude hi h l l i hi (EPA) I ifihigh‐level economic partnership agreements (EPA). In specific terms we will advance the EPA negotiations with the ROK and Australia and we will aim to initiate negotiations in the near termAustralia, and we will aim to initiate negotiations in the near term for a Japan‐EU EPA and a Japan‐China‐ROK EPA. In addition, with regard to the participation in the negotiation of the Trans‐Pacific Partnership (TPP) Agreement, we will conduct thorough discussions with a view to reaching a conclusion as soon as possible”.

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BRT Joint Statement towards an EU‐Japan FTA/EPA (12th SEP. 2011)

BRT: Japan‐EU Business Round Table

“The BRT supports the decision taken at the Summit that an EUThe BRT supports the decision taken at the Summit that an EU‐Japan FTA/EPA should address all issues of shared interest to both sides including tariffs, non‐tariff measures, services, investment,sides including tariffs, non tariff measures, services, investment, intellectual property rights, competition and public procurement”.

“the BRT expects an EU Japan FTA/EPA to enhance wide rangingthe BRT expects an EU‐Japan FTA/EPA to enhance wide‐ranging cooperation between European and Japanese business, for example in the development of new technologies and in relation to p p gthird countries”. 

“the BRT recommends that the scoping itself should be successfully

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the BRT recommends that the scoping itself should be successfully completed as early as possible”.

Possible benefit of FTAs for the EU

Japan                India       Canada     Korea     Malaysia    Singapore

lNominal GDP(US$ 1trillion)

(2010)

5.5 1.6 1.0

0.2 0.2

1.7

Source: World Bank

FTA’s Impact onEU’s real GDP 0.12 0.070.03 0.040.09EU’s real GDP

(%)

0.03 0.04

0.00

0 09

So rce RIETI (estimated b Dr Kenichi Ka asaki) ※Considered onl tariff elimination not NTM and spillo ers effect

9Source: World Bank

*EU’s real GDP: 16.25 trillion US$ (2010)  

Source: RIETI (estimated by Dr. Kenichi Kawasaki) ※Considered only tariff elimination, not NTM and spillovers effect

Surge of trade and Investment by the Japan‐Switzerland EPA

(2008)                               (2010)

27%↑Investment*            120bn yen       152bn yen

Japan‐Switzerland

(Japan→Switzerland)

*Stock Basis Switzerland EPA(2009)Source: Bank of Japan

Trade                     1,115bn yen   1,277bn yen      15%↑

, y , y(Japan‐Switzerland)

S Mi i t f Fi

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Source: Ministry of Finance

Necessary elements for Japan‐EU EIA / EPA

S illS ill ffSeven pillarsSeven pillars for for strengthening global partnership and economic integrationstrengthening global partnership and economic integration

i f d d l i h O1. Promoting free trade and complementing the WTO2. Business‐oriented integration 3 E h i b i ll b i d k3. Enhancing business collaboration and networks4. Contributing to the global supply chain5 C i i i hi d i5. Cooperation aiming at third countries6. Future oriented framework addressing new challenges7 F i i i d i bl d l7. For an innovative society and sustainable development

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※Provisions and schemes may vary with EPAs.

Involvement of Business Sector (Japan‐Malaysia EPA)

Joint Committee●Members: representatives of both governments

y y

Supervise, coordinateReport, consult

Sub-Committee on Improvement of Business Environment●Function: addressing issues in relation to the improvement of business

environment●Members: representatives of both governments●Participants: representatives from the business sector as necessary on an

Report findings Report findings

The Government of Malaysia The Government of Japan Co-chairCo-chair

●Participants: representatives from the business sector as necessary on an approval basis

Related ministries Related ministries

Japanese side Liaison Office(MoFA)

Malaysian side Liaison Office (MITI)

Feed backAnswer

Requests of improvement

Requests of complaint,check, and consultation

Feedback Answer

ReplyRequests of complaint,check, and consultation

Japanese companies in Malaysia Malaysian companies in Japan

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Japan‐EU Industrial Partnership

PSA – TOYOTA Motors Daimler – TORAY Isagro – SUMITOMO Chemical

PSA – Mitsubishi Motors FIAT – Toshiba Areva – Mitsubishi Heavy Industry

& etc.…

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IDE‐JETRO Study on global value chain

Development of value‐chain in the east Asian region

Opportunity for European companies to enter the growing Asian marketg g

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Took Effect/Signed (11countries and 1 region) MexicoS i l d

Development of Japan’s EPA/FTA networks

Took Effect/Signed (11countries and 1 region)

Under Negotiation (3 countries and 1 region)  

Under Study/discussion by the governments (3 countries and 4 regions)     

Mexicotook effect in Apr. 2005

ChileGCC

Switzerlandtook effect in  Sep. 

2009

took effect in Sep. 2007

Perunegotiation

GCCUnder negotiationGCC : Saudi Arabia, 

Kuwait, United Arab Emirates, Bahrain, Qatar, Oman

South Koread d

MongoliaUnder joint study

by the governments/industries

negotiation   concluded inNov.2010

ChinaJapan‐China‐S.Korea

Under joint study by the governments/scholars/industries

negotiation suspended  

JapanEU

Under scoping

ColumbiaUnder joint study

Philippines

ASEAN (AJCEP)took effect in Dec. 2008 Vietnam

took effect in

CanadaUnder  joint study

Indiatook effect in Aug. 

2011

Under joint study

Bruneitook effect in Jul. 2008

Thailandtook effect in Nov. 2007

pptook effect  in  Dec. 2008

took effect in  Oct. 2009 U.S.

TPPUnder

Malaysiatook effect in Jul. 2006

Indonesia

Singaporetook effect in Nov. 2002, 

revised in Sep. 2007

ASEAN+6 / 3

Under consultations 

with TPP member countries

took effect in Jul. 2008ASEAN+6 / 3 AustraliaUnder negotiation

NZUnder discussion by the governments

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Image of Japan‐EU cooperation in third countries 

‐Collaboration on barriers to trade, investment and b siness in third co ntriesbusiness in third countries

Countermeasures against counterfeit and pirated product, based on ACTA.

Raw materialsRaw materials.

Regulations on technology transfer agreement.(etc)

‐Collaboration in projects in third countries.Environmental technology, etc.gy,

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Framework of global partnership and economic integration, far more than FTA 

Technical Regulations, Standards Innovation

CooperationCooperationRule making & HarmonizationRule making & Harmonization

Trade Facilitation

Standards Innovation

IPR

Electronic Commerce Competition PolicyFTAFTA

Elimination of customs dutiesTrade Security Regulatory 

cooperation

Service

‐Elimination of customs duties‐Promotion and facilitation of trade in Goods‐Promotion and facilitation of trade in Service‐Protection of Intellectual Property Rights 

etcBusiness 

InvestmentEtc...

etc. Environment

Procurement

Etc...Third Country

17Complement/ Support WTOComplement/ Support WTO

Leaders’ agreement and next step

JapanJapan‐‐EU Summit in Brussels, 28 May 2011 EU Summit in Brussels, 28 May 2011 

• Summit leaders agreed to start the process for parallel negotiations for• Summit leaders agreed to start the process for parallel negotiations for a deep and comprehensive Free Trade Agreement (FTA)/ Economic Partnership Agreement (EPA).

• Summit leaders decided that the two sides would start discussions with a view to defining the scope and level of ambition of  both negotiations. Such scoping would be carried out as soon as possible.

• In parallel with this, the European Commission will seek the necessary authorization for the negotiation of these agreements on the basis of a successful scoping.

G20 Summit, 3G20 Summit, 3‐‐4 November 20114 November 2011

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